BERLIN, Sept. 11 (Xinhua) -- German banks warned on Tuesday that a disorderly British exit from the European Union (EU) could cause chaos on European financial markets.
There would be "upheaval on European capital markets, not just in London but also in Frankfurt, Paris and Amsterdam" if Britain crashes out of the bloc without a deal in March 2019, Andreas Krautscheid, president of the German Banking Association (BdB) told the newspaper group Redaktionsnetzwerk Deutschland (RND).
"Brexit is occupying most of our member banks and all of them are becoming increasingly worried," Krautscheid added.
The need to treat a former EU member United Kingdom differently with regards to data management in particular posed a threat to the current interconnectivity of British and European banking systems.
The BdB president noted that a large number of complex financial transactions were completed between the United Kingdom and mainland Europe every day with millions of related datasets transferred from London to the continent.
"Without a Brexit agreement or transition agreement all of these channels would have to be closed from one day to another in late March because the EU's General Data Protection Regulation (GDPR) does not allow for data exchanges with third countries," Krautscheid explained.
The BdB warning comes shortly after German finance minister Olaf Scholz told banking industry representatives in Frankfurt that a disorderly Brexit could spark a new financial crisis in Europe.
Scholz cautioned that it was still "difficult to say whether (a post-Brexit agreement) can be reached" before March 29th 2019 when the United Kingdom formally ceases to be an EU member.
As a consequence, the German minister recommended to German business leaders to make the necessary preparations for a chaotic split between London and Brussels before it was too late.
However, German Chancellor Angela Merkel has recently drawn attention to potential competitive advantages which domestic bankers could secure thanks to the United Kingdom's departure.
Merkel announced that her government would change national labor laws in order to enable financial institutes to attract highly-salaried staff from London and support a French bid to strip Britain of the right to conduct lucrative Euro-clearing activities on its soil after Brexit.
"Politically, I can easily explain that Euro-clearing must take place within the Eurozone and in that case, Frankfurt is certainly an excellent location," Merkel said.
Frankfurt and Paris are the two main competitors for financial services business relocating from the United Kingdom to the EU as a consequence of Brexit.
The British financial services lobby group "TheCityUK" estimates that 70,000 UK jobs could be lost in the domestic industry if Britain does not remain in the single market.